Macquarie Bank's chief economist Ric Deverell with some comments in a research note
Deverell argues that with the US dollar expected to weaken further and a diminishing list of alternative assets, stronger global growth is a clear positive for commodities. He says that "in this world, we think the time for reconsidering commodities has come, with an allocation to commodities likely to add significantly to a balanced portfolio".
"While much of the focus is on the benefits of precious metals as an inflation hedge, gradually increasing inflation is also supportive for the industrial commodity complex, with commodities often the source of near term inflation, thereby providing an effective hedge", the note argues.
However, he adds a caveat in saying that while global growth has improved and appears more sustainable, it's not a given that commodity prices will always go up.
And given the recent risks from equity and bond markets, Deverell says the spillover effect to the commodity space will be relatively small - arguing that there has been very little correlation between commodities to equities or bonds.
Source: Macquarie Bank
